Taxpayer cost for Main Street makeover reaches $3M mark

The price tag to remove the downtown Main Street pedestrian mall and restore two-way traffic goes well beyond the $1.9 million in sales tax proceeds many believed would be the extent of the project cost. That’s because three separate budgets are contributing to the project, and the $1.9 million only applies to physical construction. City officials say, however, the more than $3 million overall price to taxpayers is not out of line with original expectations.

By the end of 2008, design engineering and construction observation costs paid to Homer L. Chastain & Associates had reached nearly $350,000. The original downtown streetscape agreement with Chastain was for $151,876, but the increase was attributed to the discovery of more underground vaults than had been anticipated. City officials said they knew vaults were there, but that they wouldn’t know the extent of the challenge they’d pose until they were unearthed. In September 2009, aldermen approved another increase of $52,042, bringing Chastain’s contract to more than $400,000 for the project.

“The original agreement did not include inspection and design engineering for the numerous vaults, to replace the water main, and provide new service connection to buildings along the two blocks of Main Street from Elm to Mulberry,” a statement from the mayor’s office explained. “Typical for a project of this complexity, there have been several project issues once the subsurface environment was exposed. These issues have required additional redesign work and construction observation by Homer L. Chastain.”

As a rule of thumb, engineering fees are said to be 10 to 15 percent of a project’s cost. According to city officials, engineering and construction observation costs eventually reached approximately $449,000.

In June 2009, Rockford aldermen awarded a $1,897,815.75 contract to Stenstrom Excavation, despite a bid from Ringland-Johnson Construction that was about $17,000 lower. Aldermen followed a recommendation by city staff, which argued that Ringland-Johnson lacked experience installing brick pavers. Stenstrom, on the other hand, noted it would employ an experienced subcontractor for that portion of the job.

“Unforeseen” conditions related to work on vaults, utilities, irrigation, storm sewer, On the Waterfront preparations, pavers, a water main and specialty décor later led to an increase of $551,363.74 to the Stenstrom contract.

Additionally, a $38,133.26 change order from the Water Division added to what was originally anticipated to be approximately $291,000 from its budget, according to Patrick Zuroske, the city’s capital improvement program manager. Zuroske explained the department opted to replace a 100-year-old water main during construction, rather than down the road after the project was completed.

“When they got into the system, they realized they were dealing with pipe from 1908, 1911 and had some real issues, especially at Main and Mulberry, that had to be taken care of,” he said. “So, they budgeted dollars for these types of instances. They’re the ones who wanted to make the improvements, so they had the dollars set aside to do that.”

Another $85,081.96 was also approved on behalf of the Rock River Water Reclamation District, for which Zuroske said the city would be reimbursed by the tax-funded district.

According to Zuroske, $92,466 remains in the $2.65 million three-year budget supported by sales tax revenues, which he said will be used for additional lighting.

“We have 24 light units to purchase and install,” he indicated. “Each light unit averages between $6,000 and $8,000 to purchase and to install. So actually, we’re probably not going to be able to afford to do all of it at the same time. We’ll probably have to do it in phases.”

If Zuroske’s estimates for lighting are correct, the $92,466 won’t come close to covering the cost. On the low end, at $6,000 apiece, the 24 lighting units will cost $144,000 to purchase and install. On the high end, the cost would be $192,000. In the long run, he says, the endeavor would save the city money, however.

“We like to do it ourselves, simply because, frankly, if we went with the ComEd lighting, we pay forever for the rental of those units,” Zuroske explained. “So, we have learned that it’s much better to spend some dollars upfront to get lighting in that is our own, as opposed to allowing us to use some units that ComEd provides us.”

Public Works Director Tim Hanson indicated the additional lighting isn’t likely to be installed before next spring.

Aldermen ‘dumbfounded’

During the Aug. 8 Finance and Personnel Committee meeting, a number of aldermen appeared surprised the overall project cost would reach $3 million or more.

“It’s just somewhat amazing to me as the new kid on the block,” said Ald. Bill Robertson (I-14), “that a $2 million bid—and we go over by a million, but we’re OK.”

Zuroske countered by arguing the project had not gone over budget.

“If you look at the budgeted amount, which is what appears in the CIP [Capital Improvement Program] book, we had a budget of $2.65 million,” he asserted. “That’s sales tax money for sales tax-related items only—not water, not sanitary, or anything else. We have gone under that budget. We actually have not spent all of that money.”

Ald. Venita Hervey (D-5) seemed dissatisfied by the notion that vault-related difficulties had been unforeseen.

“I was just sort of leery that it was going to come in at $1.9 million, and I kept saying, ‘Are these guys considering that this is one of the oldest parts of the city, and as soon as they open it up, they’re going to find a rat’s nest?’” she said.

“We did anticipate that,” Zuroske responded. “We knew that that first phase was going to be $1.6, $1.7 million. This is sales tax money, again. Don’t confuse that with the $1.9, because you’re adding water on there. Well, if you look at our planning, we allocated, ourselves, about $200,000 for change orders based on these vaults, because we knew we were not going to be able to provide the full set of plans until we took the street off, and we took the top of these vaults off. It’s just impossible. Well, the dollars that we spent in this $551,000 change order is about $200,000 worth of additional vault work, which is what we had planned. So, our thought process was actually quite consistent to what we ended up spending.”

He added, “I’m happy to say that we were able to keep those dollars within what we had planned in the first place.”

But Ald. Pat Curran (R-2) also seemed shocked by the project total.

“The original contract is roughly for a million-nine,” he began. “There were some concerns whether we should spend that kind of money down there or not. When you total it up, we spent three-million-one, or three-million-two. That’s a 67 percent overrun.

“I’m just dumbfounded that we’re that far off,” Curran added. “I just don’t remember a $2,650,000 estimate for the cost of the project.”

Asked whether the city expected this cost all along, Zuroske responded: “I wouldn’t say that we expected all of it. I mean, certainly, there are aspects of this project that, once you start taking apart the oldest part of your city, and you begin to start looking at the subsurface environment, and you begin to discover some things that you had no idea were there—I mean, you ran into some old building foundations, some old steam lines, and there are no maps, or any other ability for us to know exactly where all of that is located. There were some areas that certainly, without question, surprised us. But, you know, in a project of this nature, this size and complexity, I don’t think we were so surprised that we felt like it was something out of the ordinary.

“We planned for a project that was complex and layered, and we set aside funds through the CIP process over three years to make the investment, because we felt like not any one given year should bear the brunt or entire financial burden of this project,” Zuroske continued. “So, we put aside money to do that. The ’08 money, for the most part, helped pay for the design of the project. We spent around $450,000 getting the project designed and having the construction observation done. So, if you realize that you’ve got about…I believe it was $449,000 that, right off the top of that $2.6 million. So, right off the bat, you’re at about $2.1 million for construction, and we have spent less than that.”

Ald. Carl Wasco (D-4) pointed to engineering fees as a big culprit behind the alleged overruns, but Zuroske maintained that is not the case.

“The engineering fees we had anticipated,” he asserted. “Typically, they are in, roughly, the 10 percent, the 15 percent range of the overall project. They’re a little higher here, because we knew going in that the level of construction observation was gonna be significantly more than what we had anticipated. As we went along…we had to do design on the run on a variety of things where we had vault work. We have a great building department that requires plans for those vaults, and requires us to get individual permits for some of the electrical work and the gas work and the plumbing work required once we have these vaults exposed. So, our original contracts with them were actually close to the 15-20 percent range of the construction cost, but we ended up paying a little bit more as we went along, because we had to do individual sets of plans and permit applications for all of the water, the electrical, the gas and physical, structural nature of the vaults themselves.

“On a project of this size and complexity, I think that, overall, we’ve performed pretty well,” Zuroske concluded. “Were there some surprises? Absolutely. I’m not sure some of those were avoidable. Certainly, there were some that I think, in the future, we need to do a better job of really rolling our shirtsleeves up and understanding the dynamic of that subsurface environment a little bit better. We learned a lot on this project about what we’re going to find when we start to dig up these streets of this age and vintage in the future. But overall, I think we’ve managed to stay within a reasonable project budget, and I think that’s really the goal of our capital construction projects once we get under way.”

Zuroske said the learning experience from the mall removal and street reopening will allow for more accurate financial planning with regard to other projects in older areas of the city, like South Main Street.